Correlation Between HudBay Minerals and First Quantum

Can any of the company-specific risk be diversified away by investing in both HudBay Minerals and First Quantum at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HudBay Minerals and First Quantum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HudBay Minerals and First Quantum Minerals, you can compare the effects of market volatilities on HudBay Minerals and First Quantum and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HudBay Minerals with a short position of First Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of HudBay Minerals and First Quantum.

Diversification Opportunities for HudBay Minerals and First Quantum

0.43

Correlation Coefficient

HudBay Minerals  First Quantum

Very weak diversification

The 3 months correlation between HudBay and First is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding HudBay Minerals and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals and HudBay Minerals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HudBay Minerals are associated (or correlated) with First Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of HudBay Minerals i.e., HudBay Minerals and First Quantum go up and down completely randomly.

Pair Corralation between HudBay Minerals and First Quantum

Assuming the 90 days trading horizon HudBay Minerals is expected to under-perform the First Quantum. But the stock apears to be less risky and, when comparing its historical volatility, HudBay Minerals is 1.14 times less risky than First Quantum. The stock trades about 0.0 of its potential returns per unit of risk. The First Quantum Minerals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,864  in First Quantum Minerals on December 29, 2024 and sell it today you would earn a total of  115.00  from holding First Quantum Minerals or generate 6.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

HudBay Minerals  vs.  First Quantum Minerals

HudBay Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days HudBay Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, HudBay Minerals is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

First Quantum Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Quantum Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, First Quantum may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HudBay Minerals and First Quantum

The main advantage of trading using opposite HudBay Minerals and First Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HudBay Minerals position performs unexpectedly, First Quantum can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Quantum will offset losses from the drop in First Quantum's long position.

The idea behind HudBay Minerals and First Quantum Minerals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.